Indian Inc expects Budget FY24 to cushion economy from global risks; optimistic FY23 GDP growth will be above 6.5%: Deloitte survey

• About 62% business leaders said that Indian GDP will grow above 6.5% in FY23, according to a Deloitte survey.
  
  
• The most optimistic business leaders are from the chemicals segment, followed by capital goods and energy.
  
  
• Business leaders expect the government to be proactive in cushioning the impact of growing risks in the upcoming Budget.
  
  
• Tax incentives, credit support, and simplification of capital gains tax structure feature amongst the top three budget expectations from India Inc.
  

Indian business leaders are confident that the economy will grow to above 6.5% percent in FY23, fuelled by strong domestic demand and the government’s push for capital expenditure, according to a Deloitte pre-Budget survey released on Friday.

About 62% business leaders said that Indian GDP will grow above 6.5%, even as multiple agencies downgraded their outlook for the last few months of the fiscal. This signals optimism and confidence in India’s resilience and growth prospects, the Deloitte report said.

India Inc’s expectations at large, are in line with Reserve Bank of India’s (RBI) forecast that Indian GDP will grow at 6.8% in FY23, an outlook the central bank gave as part of its December 2022 policy update.

The most optimistic business leaders are from the chemicals segment, who are confident that the economy will grow at a healthy pace. This was followed by capital goods and energy.

The most divided responses on growth outlook came from food processing, textiles, and life sciences and healthcare sectors – where less than half of the respondents were confident of high growth .

The report said that optimism was more pronounced amongst sectors with better performance, and where outlook was driven by strong domestic demand.

Budget to define ‘Amrit Kaal’ agenda

In the upcoming Budget 2023-24, business leaders expect the government to be proactive in cushioning the impact of growing risks that include a possible global recession caused by geopolitical turmoil, and soaring energy, food, and labour costs.

“Business leaders believe that the budget would define the ‘Amrit Kaal’ agenda for India and fuel the economy to remain resilient and continue to grow at a healthy pace, while balancing concerns around inflation and global risks,” the report said.

Expectations from the government are also higher than they were last year, with more leaders expecting governmental support for their sector this time around. About 73% of the respondents said that they are optimistic that the forthcoming budget will support their sector's growth amid the downside risks they face this year. This is a sharp rise over the previous year, where 55% indicated such sentiments.

Infra, exports, carbon neutrality among top expectations

Tax incentives, credit support, and simplification of capital gains tax structure featured amongst the top three budget expectations.

“Industry players are optimistic about the upcoming budget and expect a slew of measures for economic growth, with a strategic focus on infrastructure development, boosting exports, easing compliances, and leading the nation towards carbon neutrality, in line with R.A.I.S.E, as enshrined in G20/B20,” said Sanjay Kumar, partner, Deloitte Touche Tohmatsu India.

RAISE is an acronym for responsible, accelerated, innovative, sustainable and equitable businesses.

Targeted schemes and broader coverage of production-linked incentives (PLI), lower custom duties and affordable credit also featured the most amongst the top expectations that can help boost exports. Well-negotiated free trade agreements also featured amongst the top expectations.

“An overwhelming majority of respondents see trade treaties as vehicles for increasing investment flows and providing exchange of emerging technologies to strengthen their role in global value chains (GVCs),” the survey said.

Policies related to credit were the other asks amidst tightening monetary policies, especially from those in the manufacturing sector.

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